Secured Transaction Reform
Benefiting SMEs
Chris Wohlert
GE Capital International
November 2015
Imagination at work.
GE Confidential - Distribute to authorized individuals only.
The Challenge…
MSME/SME access to finance
impaired by inadequate secured
lending infrastructure
Leveraging moveable collateral
difficult, costly or impossible in
many economies
MSME/SME prevented from
achieving growth potential
Secured lending is the BRIDGE between reputational collateral and
capital markets access for MSME, SME and mid-market firms ….
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Benefits of Secured Transaction Reform
In the chart above, this study1
compared firms’ average access to
finance before and after registry reform
as compared to economies that did not
implement such reforms

Development of functioning laws and collateral registries
governing secured transactions provides greater access
to credit for enterprises, including MSMEs.

Recent reforms in certain economies have led to both
greater access to and lower cost of finance for SMEs

Diversification of financial services sector as non-bank
financial institutions expanded into secured lending to
SMEs

In China2, following reforms, more than $570B in
financing secured by accounts receivable (40% of which
supported SMEs) extended by lenders

Led to development of both commercial leasing and
factoring industries
SME/MSMEs benefit … time to build the bridge
Collateral Registries for Moveable Assets: Does their Introduction Spur Firms’ Access to Bank Finance?; Inessa Love, Maria Soledad Martinez Peria and Sandeep Singh;
http://www.ifc.org/wps/wcm/connect/8891c280415edb709ba3bb9e78015671/Collateral%252BRegistries%252Bfor%252BMovable%252BAssets%252B%252BDoes%252BTheir%252BIntroducti
on%252BSpu%252BFirms%252BAccess%252Bto%252BBank%252BFinance.pdf%3FMOD%3DAJPERES&sa=U&ved=0CAgQFjACahUKEwjRzfrDvNXHAhUD5KYKHQFwCzM&client=internal-3
uds-cse&usg=AFQjCNEb3ml0qAuv54daPPP74q-URicSdw
2Secured Transaction Systems and Collateral Registries, International Finance Group, January 2010.
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Secured Transaction Reform – Key Issues
Maximising access to secured
credit for SMEs depends upon
confidence of the secured
creditor in the value of the
collateral – and ability to
perfect and enforce quickly
and efficiently.
Transparency
Efficiency
Efficiency: Process to
register is simple, fast, and
cheap.
Enforceabilit
y
Transparency: Security
interest is accessible, and
secured creditor can readily
see all competing interests.
Enforceability: High degree of
confidence in ability to secure
collateral quickly in event of
debtor default – even for
moveable and rapidly
depreciating assets (inventory &
AR)
Three pillars … plus education
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Recent Reforms across APEC
CHINA: Enforcement framework continues to be enhanced providing greater
certainty for secured lenders following the release of the latest Judicial
Interpretations of the Law on Civil Procedure issued January ’15; factoring judicial
interpretations issued November 2014 and September 2015
PHILIPPINES: Development of a self-service chattel mortgage registration
system in process, initially launching through major banks with planned later
expansion to an online system.
VIETNAM: Coordination with IFC to jointly train local bankers on moveables
lending through symposiums and workshops leveraging industry and subject
matter experts, resulting in a near doubling of security interest registrations and
registry searches between 2012 and 2014.
Reforms are progressing … at various speeds
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